New Delhi: The Dow Jones industrial average closed at a record high on Tuesday, backed by China's economic growth targets and an increase in European retail sales.

It soared from the opening bell, peaked as much as 158 points and reached 14,286, an increase of 0.89 percent, breaking its own record high set in October 2007.

London's blue-chip index hit its highest level since January 2008 today as optimism for the powerhouse Chinese and US economies triggered a rally in markets around the world.

The FTSE 100 Index also surged by 86.3 points to close at 6432 — its highest level since January 2, 2008, when it closed at 6479.4.

The Dow index, however, fell back slightly and closed up 125.95 points at 14,253.77.

The gains represent a remarkable return for the stock market. The Dow has more than doubled since falling to a low of 6,547 in March 2009.

The Dow's gains were led by industrial and technology stocks. Cisco System rose 2.3 percent to USD 21.22 and United Technologies reached USD 1.89 or 2.2 percent to USD 91.02.

The record set by Dow is not inclusive of the impact of inflation. If adjusted, the Dow would have to scale 15,502 to match its previous record.

The economic stimulus from the Federal Reserve, and other global central banks, have immensely helped the market.

Though the US stock market has gained since then, its economy has not fared well. Unemployment was at 4.7 percent when Dow was at its peak five and a half years ago, compared to 7.9 percent on Wednesday.

Strengthening of the economy in many areas boosted the Dow index. Housing is on the recovery mode, more companies are hiring. That has given way to a nine percent rise in stocks this year.

For all of last year, the index rose seven percent.

Also, the S&P 500 is up 128 percent from its low in March 9, 2009, about the same as the Dow.